Casey Robinson, Research Director of m3property, an Australian property valuation and consulting firm gives her view on the 2019 outlook for Sydney and Melbourne property market.
The outlook for the Sydney Residential market in 2019 is for further slowing in the first half of the year. While supply is decreasing and population increasing in Sydney, demand has decreased significantly with pre-sales, auction clearance rates and prices all falling as a result. Political uncertainty, with a NSW and Federal election in 2019 and a constrained funding environment as a result of actions taken following the finalisation of the financial services Royal Commission in February 2019 are also expected to keep the residential market flat over the year.
The Sydney office sector is expected to see a further reduction in vacancy over 2019 as withdrawals to stock continue to exceed supply and demand remains positive, albeit moderate due to the lack of available space in many markets. This is expected to continue to drive solid rental growth over the year. Yields are expected to be stable over 2019 due to the already low yields currently being recorded and forecast rising bond rates over the year.
The Sydney industrial market is expected to continue to benefit from infrastructure improvements in the State and retailers looking for ‘last mile’ distribution space. Vacancy is expected to remain low and rents are forecast to rise, albeit at a slower rate than over 2018. Land values are expected to continue to benefit from a lack of available land, particularly in inner locations within the metropolitan area. Yield tightening is expected to slow due to the current record low yields being recorded at current across all Sydney submarkets and forecast rising bond rates over 2019.
“Sydney residential market is expected to be flat while Melbourne’s prices will likely stabilise in 2019.”